In a leveraged buyout,the managers of a firm,its employees,or other investors:
A)Move the company elsewhere and start over.
B)Obtain the assets of the company through bankruptcy proceedings.
C)Borrow funds to buy out the firm's stockholders.
D)Negotiate a merger with another firm to create a conglomerate.

Question

Quizplus · Accepted Answer

In a leveraged buyout, the managers, employees or other investors borrow funds to buy out the firm's stockholders. This allows them to take control of the company without having to invest their own capital upfront. The debt used to finance the buyout is typically repaid using the cash flow generated by the company's operations or by selling off non-core assets. This strategy is often used by private equity firms to acquire businesses and improve their operational performance before selling them for a profit.

In a Leveraged Buyout,the Managers of a Firm,its Employees,or Other